Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
Well, just this week they struck again. This time the target was Discover. The penalty? $200M in refunds to 3.5M customers — and average of almost $60 per affected customer — plus $14M in penalties payable to the FDIC and the CFPB. They’re also being required to change their marketing practices.
Why are they being punished? Because they engaged in shady sales tactics related to their credit-protection products. According to the CFPB, they:
“determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products.”
For their part, Discover says the settlement was to:
“resolve previously disclosed matters related to the marketing of certain credit protection products sold by telephone.”
The refunds cover a period spanning late 2007 through mid 2011 and related to products including credit monitoring services, ID theft protection, and payment-protection programs.
According to the complaint, Discover reps implied that the services were free benefits, skipped over details regarding costs and program terms, and even signed people up without their consent.
No wonder the banks fought so hard against the creation of the CFPB. It used to be the fox watching the hen house. Now there’s at least an impartial entity keeping an eye on things.